Important components of Salary Structure in India:

  • Earnings: You can set up the amount that is earned by an employee, such as wages, basic salary, etc.

  • Allowance: is an amount payable to employees during their regular employment. Depending on the type of allowance, it might be either fully or partially taxable. Examples: house rent allowance, leave travel allowance, etc

  • Deductions: the amount that is deducted by the employer in the form of taxes, insurance premiums, and other deductions.

You can set up earnings, allowances, or deductions as follow:

1. In Payroll, go to Settings > Salary Components > Earnings/Allowances/ Deductions.

2. Click New Earnings/ Allowances/ Deductions component and complete all required fields:

  • Name: choose a name for recurring compensation

  • Description: describe the recurring payment (optional)

  • Other Configurations: you can click on the checkbox, if

    • It is a taxable component: The income tax amount will be divided equally and deducted every month across the financial year.

    • Calculate on a pro-rata basis: Pay will be adjusted based on employee working days.

    • Contribute to Insurance & Fund: This component will be contributed to Insurance & Fund.

    3. Click Save to finish

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